Running a small business is already a lot of work. Keeping up with small business bookkeeping can easily get pushed aside when you’re busy serving customers and managing your day-to-day operations.
But when your records aren’t organized, things can become stressful very quickly—especially when tax time arrives.
The good news is that small business bookkeeping doesn’t have to be complicated. The important thing is to keep your financial records organized throughout the year.
Here are five important records every small business owner should keep track of.
1. Sales and Income Records
One of the most important parts of small business bookkeeping is keeping accurate records of the money your business receives.
Depending on your business, this could include:
- Invoices
- Sales receipts
- Online payments
- Cash sales
- Other business income
Keeping your sales and income records organized makes it easier to see how much your business is earning and helps when preparing your tax return.
2. Business Expense Records
Businesses have many different expenses throughout the year. Keeping track of them is an important part of good bookkeeping.
Common business expenses may include:
- Office supplies
- Advertising and marketing
- Professional fees
- Business-related software
- Rent and utilities
- Other eligible business expenses
Keep a record of your business expenses and the supporting documents for each expense.
Not every expense is automatically deductible, so make sure you understand the CRA rules or speak with a tax professional if you’re unsure.
3. Receipts
Don’t rely only on your bank statements.
Keeping your receipts and other supporting documents can help you show what an expense was for and why it was a business expense.
Today, many businesses receive receipts electronically, so you can organize them digitally instead of keeping boxes of paper.
A simple system for saving receipts throughout the year can make small business bookkeeping much easier.
4. Bank Transactions
Your business bank account should be regularly reviewed and compared with your bookkeeping records.
This process is often called bank reconciliation.
Regularly reviewing your bank transactions can help you find:
- Missing transactions
- Duplicate entries
- Bank fees
- Incorrect amounts
- Unrecorded payments or deposits
Finding mistakes early is much easier than trying to figure them out months later.
5. HST Records
If your business is registered for GST/HST, keeping accurate HST records is especially important.
You should keep track of:
- HST collected on sales
- HST paid on eligible business purchases
- Input tax credits (ITCs)
- HST return information
- Supporting invoices and receipts
Keeping these records organized can make it easier to prepare your HST return and avoid unnecessary problems.
You can find more information about GST/HST record-keeping on the Canada Revenue Agency website.
Why Is Small Business Bookkeeping Important?
Good small business bookkeeping is about more than preparing your taxes.
Keeping your records organized can help you:
- Understand how your business is doing
- Keep track of your cash flow
- Prepare for tax filing
- Stay organized
- Make better business decisions
- Find mistakes sooner
- Avoid the last-minute rush
It also gives you a clearer picture of where your business money is going.
And there’s one more benefit:
You don’t have to spend your weekend looking through a box of receipts from six months ago!
How Often Should You Update Your Bookkeeping?
Don’t wait until the end of the year to organize everything.
Depending on the size and activity of your business, you may want to update your bookkeeping weekly, biweekly, or monthly.
Regular bookkeeping makes it easier to keep track of income and expenses while the information is still fresh.
It can also make tax season much less stressful.
Keep Your Business Records Organized
Good record-keeping is an important part of running a small business.
You don’t need a complicated system. You simply need a consistent way to record your income, expenses, receipts, bank transactions and HST information.
The earlier you develop a good bookkeeping routine, the easier it becomes to maintain your records throughout the year.
If you’re spending too much time trying to keep up with your books, getting professional help may be a good option.
Need Help With Your Bookkeeping?
Windsor Tax & Accounting Services can help small business owners keep their financial records organized and stay on top of their bookkeeping.
We can help with bookkeeping, tax preparation and other accounting needs for businesses in Windsor, Ontario.
Windsor Tax & Accounting Services
📞 519-816-7318
✉️ info@windsortax.ca